Abu Dhabi National Oil Company (Adnoc) Bid $15.9 Bn for Covestro

Abu Dhabi National Oil Company (Adnoc) is reportedly planning to submit a formal offer of EUR14.4 billion ($15.9 billion) to acquire German chemicals giant Covestro.

Adnoc, which is currently in the process of identifying potential acquisitions, has been in discussions with Covestro for over a year. The Frankfurt-listed company has already rejected a series of lower offers.

Covestro, which was spun off from Bayer in 2015 and listed on the Frankfurt Stock Exchange, is increasingly confronted with the challenge of remaining competitive in a European market that is experiencing deindustrialization and high natural gas prices.

Currently, Adnoc is preparing to submit an offer to acquire Covestro, with the intention of offering an anticipated price of EUR62 per share for the company, which has a workforce of 17,500 individuals across Europe, Asia, and the United States. If the transaction is finalized, it would be the first time a Gulf state-owned company has acquired a Dax 40 DX company. Located on the outskirts of Cologne in Leverkusen, Covestro is a global leader in the production of polyurethane- and polycarbonate-based foam materials. These materials are utilized in a wide range of applications, including office chairs, insulation foam, and refrigerators.

Since the commencement of the Ukraine conflict, Germany has experienced a significant increase in its natural gas prices as it has endeavored to reduce its dependence on Russian gas. This transition has significantly impacted the competitiveness of the country's energy-intensive industries.

A variety of Covestro plastic products, such as polyurethane and polycarbonate, are manufactured using natural gas as feedstock. Currently, Adnoc has control over over 90% of the natural gas reserves in the United Arab Emirates and is preparing to increase its production of liquified natural gas.

Adnoc, which had previously created a team of 50 dealmakers led by Morgan Stanley executive Klaus Froehlich, believes that Covestro is well-positioned to benefit from the global energy transition. This is due to the fact that countries worldwide are enacting regulations that mandate that buildings be more adequately insulated.

Source: Dow jones